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Credit unions want to be exempt from Consumer Financial Protection Bureau oversight

April 22, 2016 Updated: April 22, 2016 at 3:45 pm
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A trade group for credit unions is trying to persuade Congress to exempt it from regulation by a new agency created in the wake of the financial crisis, the group's CEO said in an interview Friday in Colorado Springs.

The Credit Union National Association, which represents the nation's nearly 6,200 credit unions, wants the member-owned financial institutions free from regulation by the Consumer Financial Protection Bureau, a new agency created by Wall Street reform legislation to enforce federal consumer financial laws. The group has persuaded 239 members of the U.S. House, including Rep. Doug Lamborn, R-Colorado Springs, to sign a letter to the bureau urging the agency to use authority they believe is included in the legislation that created it to exempt credit unions from regulation by the bureau.

"This should be a message to (bureau director Richard) Cordray," said Jim Nussle, a former Iowa congressman who became the association's president and CEO in 2014. "We believe we should be exempt from the CFPB and that we shouldn't have been part of (the agency) to begin with. We were not part of the problem in the financial crisis."

Cordray told CUNA members in a February speech that he doesn't believe the agency has the authority to exempt credit unions, since "Congress had all of these suggestions in front of it when the Dodd-Frank Act was being written. But Congress did not do that, and though it gave us some amount of exemption authority, it is not plausible to me that we could use such authority to override Congress's own judgment on such a broad-based policy matter." He noted that Congress gave the agency authority to supervise only credit unions with more than $10 billion in assets, but not smaller institutions. Nussle made his comments during the Mountain West Credit Union Association's annual meeting and convention, attended by more than 600 credit union executives and board members through Saturday at The Broadmoor hotel. The Denver-based association represents 135 credit unions in Arizona, Colorado and Wyoming.

Credit unions spend $6,1 billion in 2014 complying with regulations, or about 17 percent of all expenses, and lost more than $1 billion a year in revenue as a result of regulations, according to a February study by Cornerstone Advisors Inc., a Scottsdale, Ariz.-based bank and credit union consulting firm based on a detailed survey of 53 credit unions. One fourth of the working time of credit union employees' working hours is spent on regulatory compliance and regulatory costs nearly doubled between 2010, when the Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted, and 2014.

Regulatory costs for Colorado's 86 credit unions totaled $88.1 million in 2014, plus another $19.3 million in reduced revenue, or an average of $1.25 million per credit union and $67 each for the state's 1.6 million credit union members, the study found. Regulatory costs vary widely from $48 per member in Utah to $124 per member in Washington, D.C.

"We recognize that some regulations are needed to maintain safety and soundness, but some make it more difficult to deliver services to our members," Nussle said. "It is not so much about getting rid of regulations as it is about how they are applied. Some of it is the inconsistency in how they are applied or not using technology in the way they are applied."

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Contact Wayne Heilman: 636-0234

Twitter @wayneheilman

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